The Political Foundations of Inter-Firm Networks and Social Capital: A Post-Communist Lesson

Abstract

This article attempts to account for both continuity and change in network structures and relationships by analyzing how a country's political approach to institution building interacts with network reproduction. While firm level actors may develop tenacious socio-economic relationships, the authority structure of a network emerges from the ways certain constituent firms align themselves with public institutions. I empirically examine this approach by analyzing the evolution of Czech industrial networks during and after communism. The fragility, eventual stability, and subsequent changes in networks come not from purely "intranetwork" factors, but rather from the political approach of the government toward institution building. In short, this article aims to renew our focus on the origin and evolution of social capital and networks by bringing politics back into the forefront.

Keywords: Network evolution, institutions, politics, transitions, social capital

JEL Classification: D74, D83, F20, H11, L22, P26, P31